How Chile is Transforming the Non-Conventional Renewable Energy Sector

Renewable Energy in Chile: Arid deserts, snowy mountain ranges, glaciers and an almost endless shoreline are combined to make Chile a highly desired destination for tourists, adventurers, thrill seekers and curious souls. The overwhelming natural beauty that Chile holds has dazzled foreigners for centuries and has for some time now been perceived by locals differently.

The environment as a whole is now being more valued and respected every day. The extent of these evolving attitudes is
shown through huge national public policy changes that already have been or are in the process of being implemented. Perhaps one of the most interesting and radical of these public policies revolves around the way energy is being generated in Chile. Energy, for obvious reasons, is expensive and finite. However, at the same time, it constitutes a vital and critical factor for the livelihood of local producers. Within this stressful relationship and in harmony with the way modern civilized and sustainable-minded people see the world, non-conventional renewable energies have become an exciting and inexhaustible source of energy. 

 Non-Conventional Renewable Energy Sources in Chile

Chile is a hotbed for non-conventional renewable energy sources. This country is geographically blessed with thousands of kilometers of coastline, long and tall mountain ranges and active volcanoes. There is a huge amount of potential for the continued growth of the non-conventional renewable energy sector and Chile is well-aware of this.

Non-conventional renewable energy sources in Chile include:

1.    Solar energy
2.    Geothermal energy
3.    Biomass energy
4.    Wind energy
5.    Marine energy
6.    Biogas energy
7.    Small-scale hydroelectric energy (up to 20MW)

In simple terms, non-conventional renewable energies have the unique characteristic that within their transformation and extraction process, they remain infinite, not taking something that cannot be replaced. Renewable energies can be classified as conventional and non-conventional. This will depend on the level of the technology needed to produce them and on the degree of penetration and presence in the energy markets. The most important conventional renewable energy source in Chile is large scale hydroelectric energy. The development of non-conventional renewable energies to generate electric energy has grown considerably during the past years. This has encouraged many investors from companies in Chile and take advantage of the steady growth taking place in this sector.

 Changes in Chilean Regulations and Trends

Traditional historical entry barriers that have limited it in the past have been removed, allowing for investment and growth. These changes to regulations and trends in Chile have promoted steady growth, especially in the energy sector and the mining industry. The two key aspects that were fundamental in this respect were:

• The enactments of laws number 20.257 in the year 2008, and law 20.698 in the year

  

• Systematic and official implementation of the tools and instruments that directly led to investment initiatives.

Positive consequences followed, and by the beginning 2016, approximately 2473 Million Watts were being originated from non-conventional renewable energy sources. In spite of these promising figures, auto-consumption has been much lower than anticipated and this is why the Chilean Energy Ministry is determined to boost auto or internal consumption of non-conventional renewable energy sources. To accomplish this goal, four mechanisms have been identified as critical:

1. Encouragement for the creation of solar energy projects. 
2. Evaluation and encouragement of auto-consumption tools and mechanisms used by the Government.
3. Create and set the right conditions so that Bioenergy projects can thrive.
4. Contribute and lead the way in human resource training regarding non-conventional renewable energies

The Future of Chilean Non-Conventional Renewable Energy

Chile is looking ahead to the future and by the year 2020, 20% of all the electric energy produced in Chile shall come from non-conventional renewable energy sources. This is a legally binding goal stated in the modified article number 150 bis of law number 20.257. The former article 150 stated that electric companies were forced to demonstrate that at least 5 % of the energy that had its origins in contracts signed after August 2007 came from non-conventional renewable energy sources. This original percentage was supposed to increase gradually by the year 2015 until the original goal of 10 % was reached by the year 2024. In other words, before the new article160 bis, the goal was that by the year 2024, 10 % of all the electric energy produced in Chile would come from non-conventional renewable energy sources.

The ‘20/20’ modification, as it is popularly known, shortens the deadline and increases the requirements. It has a retroactive effect that is mandatory, for all contracts and agreements that were already in existence. Even though at first there was some skepticism and criticism due to costs and infrastructure factors, experts are coming around and are leaning in favor of supporting this massive endeavor.

In conclusion, Chile is currently and will continue to be for many years to come, a real haven for investors, domestic and foreign. The government’s commitment to the growth of the non-conventional renewable energy market makes Chile a leader not just in Latin America, but on a global scale. Adequate public policies and laws mixed with a gifted geography and climate support this claim. Many international investors are taking advantage of all the gifts that Chile has to offer by forming companies and entering this attractive market.

Start off on the right track: partner with a local

Strong national sectors, a stable economy and a pro-business and -investment government project a positive and profitable future for Chile’s economy and growth.

Though company formation and compliance procedures can be complex, partnering with a local expert will make this process simpler for you, and get you one step closer to your business success.

Biz Latin Hub provides a suite of market-entry and back-office services across Latin America, including in Chile. Our local legal and financial experts take due care to ensure your business is compliant and in the best position to succeed. Let us support your business in Chile. If you require personalized information, please reach out to our team now.